Cash is not dead. Memo to techies, sharing economy supporters and all other believers in the modern "disruptive economy": cash is not dead; cash rules, OK! And that includes Prime Minister Malcolm Turnbull. Don’t believe all that talk about the death of cash and the looming advent of the cashless society -- it's still not on its way, judging by the latest data on bank notes from the latest Reserve Bank annual report, released yesterday. That showed an 8% rise in the value of banknotes circulating in the Australian economy in the year to June, 2015. That was after a 7% growth in value in 2013-14 and 6.2% in 2012-13. The RBA said there were 1.3 billion notes in the economy, worth $65.5 billion and the 8% growth was above the long-term growth rate of 6% (itself a high number given all the tosh about the advent of cashless transactions in recent years). That’s not to say cashless banking and payments aren’t here -- they are, and growing rapidly and new ideas like Apple Pay and the various tap-and-pay systems are adding to the momentum. -- Glenn Dyer
Cash is king. But like a little Aussie bleeder (thanks Norman Gunston), cash is hanging in there.The RBA points out that the high level of growth of banknotes in the economy was driven by high-value notes -- specifically the $100 and $50 notes. The number of bank notes on issue has historically tracked around the rate of growth in nominal GDP, but in 2014-15 nominal GDP grew by just 1.8% and bank notes on issue by 8%, driven by rising demand for the two high denomination notes. In fact the value of notes in the economy has been growing as nominal economic growth has been slowing. That 1.8% figure was the lowest since 1961-62 according to the Bureau of Statistics. But bank notes on issue grew more than three times as fast as nominal GDP, suggesting that consumers fear deflation (real money has a higher value in times of falling prices), or when consumer fears about the future are high, as we saw in the GFC when the bank had to boost the value of bank notes in the economy by 19% in the last quarter of 2008.